Bits Bucket for May 7, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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How is the red-hot spring sales season looking so far this year?
Perhaps the most surprising element in the Clear Capital report (linked below) is the extent to which the Midwest markets are still getting hammered by massive price declines. I would have thought coastal markets, where the bubble was far more massive, would be the areas seeing the biggest drops by now, but apparently that is not the case.
Housing Prices Dip Below March 2009 Lows
Research firm says we’re in a double-dip housing recession
05/05/2011 | Mark Huffman | ConsumerAffairs.com
If we didn’t know it before, we do now. We are officially in a double-dip housing recession.
A report from Clear Capital shows the average U.S. home price nationwide has dipped below the low recorded in March 2009. A combination of foreclosures and short sales attracted bargain-conscious buyers in recent months, many paying in cash and making low-ball offers.
Also skewing the results is the fact that low-priced, distressed properties are selling faster than more expensive homes, so the average price per sale has fallen.
The results are not good news for homeowners, who are seeing their equity melt away month after month. The Clear Capital Home Data Index Market Report shows the national average home price is down 0.7 percent from the March 2009 low.
…
Also skewing the results is the fact that low-priced, distressed properties are selling faster than more expensive homes, so the average price per sale has fallen.
Flippers in action. I posted that link to one outfit in the past few days. Most of the homes they offered were in the $100k, low $200k range. We’re also seeing a small number of more expensive homes than that group come back on the market after only owning 1-2 years. I think I’ve seen 4 so far in this season.
Looked at one in Lysander this morning that definitely got spruced up but doesn’t yet have all kitchen appliances. Can’t remember the price last time but I was thinking the new price is $75kish more. Maybe it’s less than that. It’s on the river. Not a particularly attractive home on the outside but a decent piece of land accessible to a natual water source.
Since so much of the local inventory is not in the best of shape flippers in general may be doing us a service. But that 1 group was pushing 7 year balloon payments to the financially unsophisticated. They’re creating the next round of FBs. It really makes me angry.
Doing us a service? Yeah, show me a flipper that truly fixes up a house…
True dat. It’s just that I hate living next to empty deteriorating houses or even lived in deteriorating houses. I’ve been in enough of them to turn me off to certain neigborhoods I used to think were desirable. In New England, at least in the more developed areas, the truly rotting would eventually get purchased and redeveloped. Here buildings just get abandoned where they rot for years.
I could show you some. In the markets that are seriously declining, flipping is a different game compared to when people bought a house, raised the price and put it back on the market. In a way, lenders are flipping. They get a house that is in bad condition and they rehab it. I’ve seen well done overhauls and superficial jobs.
Consider a foreclosed house I’m doing a mold remediation bid on right now. The mold is not too bad. But half the drywall is missing, somebody tore out the boiler, the kitchen, most of both baths. It needs paint, carpet as well. There is no way it will qualify for a loan. Who will buy it? Someone who wants to live there? Most families don’t have the finances or experience to take this project on. If a cash buyer gets it, fixes the problems and sells it to an end user(most likely at a price lower than the comps), who’s to say that’s a bad thing? Right now it’s sitting there looking really bad and the neighbors are unhappy about that.
There are loans out there for end users to obtain and try this on their own:
‘Q. We would like to buy a fixer-upper as our first home because prices in our area are so low. Trouble is, many of those properties are in awful shape, and we wouldn’t have much cash to fix one up after we bought the house. We’ve heard that the FHA offers loans that will finance a purchase and also the repairs in a lump sum, but we don’t know anything about it. Do you?’
‘A. Sure. It’s the Federal Housing Administration’s 203(k) rehabilitation-loan program, which provides the money to both purchase or refinance a house and make improvements or needed repairs with a single mortgage.’
Read more: http://www.dailyherald.com/article/20110506/entlife/705069991/#ixzz1LfXSqGVG
“But half the drywall is missing, somebody tore out the boiler, the kitchen, most of both baths. It needs paint, carpet as well. There is no way it will qualify for a loan. Who will buy it? Someone who wants to live there? Most families don’t have the finances or experience to take this project on.”
Thank goodness for folks like Ben who have stepped up to this entrepreneurial opportunity.
I wouldn’t take on that project, and here’s why. It’s in Flagstaff, and the REO broker called me and told me the address. I said I was familiar with it as I had just spent 3 days working on it and probably knew more about the house than anyone. He didn’t know about the mold until I mentioned it, but said it was priced at around $54k, or the low $30s per sq ft. He said it would sell for around $178k after repairs. Based on comparable rents, I’m guessing it’s worth about $100k.
It hasn’t been winterized and couldn’t have been with all the broken pipes. At this altitude, there is likely to be freeze damage. Throw this in with all the other repairs and I’m not sure that at $54k it could be done at a profit. This is the dilemma rehab houses represent. If you pay $54k, what will it cost to get it into lendable condition? Another $50k, maybe more? And what might it sell for? Too many question marks for my taste.
And why put $50K into it, when investing overseas has a higher return?
Our economy……..
“Housing Prices Dip Below March 2009 Lows”
It’s odd that many of the better performing markets have the highest rates of REO saturation. Early knifecatchers in action? Or have those markets already bottomed? Or is the number of REOs somehow not a major factor in price determination- at least in more desirable markets?
In our development, where my wife awaits foreclosure and we are one of the few residents(it’s mostly a second homes/investment homes townhome development–”the boomers are coming” addition of 120 units to an established golf resort) there have been 3 sales that I know of in the last 6 months.
The unit adjacent ours closed 6 months ago for 220k(they all paid 380k ish); and one sold on our circle for 200k three months ago. That one is reoffered at 230k; but they are not getting any bites. Bofa accepted a short sale offer on a third one for 155k we heard yesterday. 220,200,155. Hmm… How low can it go? As fast as was going up in 2005 to 2007 it is now going down.
We purchased one in 2005 for 200k so it is over-correcting seemingly, what with all the “great” jobs reports of late…Why why WHY did we buy another in 2007 for 2x the price of our 2005 purchase? (palms forehead)? ok it was greed and the fact that we had been making money on things like beach shacks for a million insanity; so why not make some more??? But what a stupid buy in hindsight; at least we did not tap the 40k instant equity based on the appraisal of 440k.
Almost makes wife want to do a short sale after all…I don’t think the bank wants to own these, they are empty, have taxes and HOAs, and worst of all, alomost nobody seems to want them.
150k today will buy you what 400k would get you when they were the hot ticket. But wife’s new auction date could get rescheduled and we do like living here even if it is free-for now. Like it was rescheduled over and over last time before they cancelled all their OR sales in March; but she/we can’t count on that to happen and it only grants temporary reprieve. Getting lots of solicitations in the mail regarding being represented by a lying realtor for a short sale.
As far as getting a job here in C. oregon; as a sub teacher watching; At this point the union is negotiating an average $2,000 per teacher pay cut in lieu of more massive layoffs. 10 less contract days, of which 5 would be instructional days. So less prep time, bigger workload is better than no job
Midwest salaries will drag down midwest housing prices. At least on the coasts there are supply and demand issue due to water, mountains, desert, etc. In the midwest there are flatlands and cornfields as far as the eyes. Can see.
Can’t help but wonder if our old pal Eddie made all those Atlanta real estate investments he used to brag about here, and if so, how deeply he is under water by now. Hopefully he also bought a few Las Vegas investment properties for good measure.
Foreclosures drag down Atlanta real estate prices
Real Estate Market Profile
By Gilbert Mohtes-Chan, Friday, May 6, 2011.
Inman News™
Metro Atlanta home prices have fallen to the lowest levels in more than a decade, sinking under the weight of distressed properties.
The region this spring ranked 15th in the nation in foreclosure filings, with 27,250 properties (1 in 79) in trouble, foreclosure data provider RealtyTrac reported.
At the same time, home sales declined 34.1 percent year-over-year in March, to 2,404, but showed steady improvement in the past quarter, according to the Atlanta Board of Realtors.
…
Leaving Las Vegas: The Sequel
Even the wealthy now are walking away from mansions in Las Vegas
A growing number of high-end homes are selling at a loss or facing repossession by lenders in Las Vegas, which already has the highest rate of foreclosure filings among large U.S. cities. The wave of defaults that began with subprime borrowers and the unemployed has spread to upscale homeowners who see no point of staying even if they can afford to.
By John Gittelsohn
Bloomberg News
Actor Nicolas Cage bought a home in Las Vegas, Nev., in 2006 for $8.5 million. By 2010, it was in foreclosure.
Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.
The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million — an “unrealistic” price, according to Zar Zanganeh, the broker handling the listing.
“It’s sad,” Zanganeh said, his high-heeled boots clacking on the marble floor as he gave a tour of the 14,000-square-foot mansion featuring a six-person steam shower and a closet the size of a small apartment. “There’s a lot of inventory, a lot of homes like this waiting for an owner.”
…
National Housing Prices See Dramatic Drop
Published on: Friday, May 06, 2011
Written by: Diana Olick
Even while the U.S. job market improves, the damage that has already been done in the housing market continues to negatively impact the price of homes across the nation. After a brief upturn, prices are now souring due to a large seller’s market of foreclosed and bank-owned homes subject to short sale. For more on this continue reading the following article from The Street.
It’s official.
Home prices have double dipped nationwide, now lower than their March 2009 trough, according to a new report from Clear Capital.
It was inevitable, and it was predicted (by me for sure) that a surge in sales of foreclosed properties and a big push by banks to facilitate short sales would force home prices down dramatically.
Sales of bank-owned (REO) properties hit 34.5 percent of the market, according to the survey, resulting in a national price drop of 4.9 percent quarterly and 5 percent year-over-year. National home prices have fallen 11.5 percent in the past nine months, a rate not seen since 2008. Add short sales, where the bank allows the borrower to sell for less than the value of the mortgage , and prices have nowhere to go but down.
“With more than one-third of national home sales being REO (bank owned), market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales,” says Clear Capital’s Alex Villacorta.
You don’t have to tell Los Angeles Realtor Bill Kerbox any of this. LA prices had been improving, and LA is still one of the nation’s best-performing metro markets right now. Recently, however, prices took a turn, now down 2.4 percent quarter to quarter thanks to 34 percent REO saturation.
“We have definitely seen a number of both short sales and foreclosed properties along the West Side here, and they have definitely taken a hit,” bemoans Kerbox. “It hurts to have a very low comp pop up next to your beautiful new home.”
…
To us who rented during the last ten years, our grins look more smug! Keep up the good finds!
Your tax dollars are continuously getting poured down the residential real estate rat hole…
Fannie Mae Posts Deep Loss
By Michael Baron 05/06/11 - 07:27 PM EDT
NEW YORK (TheStreet) — Fannie Mae(FNMA_) swung back to a multi-billion dollar loss in the first quarter late Friday and gave a guarded outlook for the housing market.
The government-sponsored mortgage lender said it lost $8.7 billion, or $1.52 a share, in the three months ended in March, narrower than its massive year-ago loss of $13.1 billion, or $2.29 a share, in the same period a year earlier.
The latest quarter reflects the payment of $2.2 billion worth of preferred stock dividends to the U.S. Treasury. In the fourth quarter ended in December, the company reported net income of $73 million, before the payment of the Treasury’s $2.2 billion in preferred dividends.
…
No worries mate…
———————
The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
http://online.wsj.com/article/SB126168307200704747.html
“…$8.7 billion…in the three months ended in March, narrower than its massive year-ago loss of $13.1 billion…”
Roughly $11 billion in Fannie Losses a quarter plus a similar level at Freddie would amount to $88 billion a year in losses — so a $400K loss limit could enable this to continue for a half-decade or so.
Sounds like there should be no worries at F&F for a while, then?
Why be a fool and throwing away money on a monthly rent or mortgage payment when you can enjoy paying ’squatter rent’ and stimulate the U.S. economy in the process.
‘Squatter rent’ may benefit the U.S. economy by $50 billion
Marketplace, Friday, May 6, 2011
Michael Feroli, chief U.S. economist at JPMorgan Chase, discusses how mortgage defaults may actually be contributing to the economic recovery.
Tess Vigeland: When putting a roof over your head, you generally have two choices: you rent or you buy. But the housing bust has created a hybrid of the two. People who bought a home, but at some point stopped paying the mortgage either because they can’t or because they decided not to. Yet, they’re still living in the house.
Michael Feroli has been tracking what’s called “squatter rent” and he says it’s actually helping the economy to the tune of $50 billion. He’s chief U.S. economist at JPMorgan Chase and joins us now. Welcome.
…
‘Squatter rent’ is an oxymoron. If they’re referring to the money that gets fed by squatters into the system, they should call it ’squatter bucks’ or something. Squat stimulus?
Next thing you know, we’ll be giving them medals for keeping the economy afloat.
Idiocracy
“Sadly, the free markets are rarely reasonable.”
Sadly, financial journalists often have a shallow grasp of market forces.
Home prices going down
By Nancy Marshall Genzer Marketplace, Tuesday, April 26, 2011
Home prices are falling in most major U.S. cities. It’s been a long downward trend, and it’s wiped out assets both real and imagined.
Reduced price sign in front of house
A reduced price sign sits in front of a house in Glendale, Calif. (David McNew/Getty Images)
Kai Ryssdal: It’s a reasonable thought to expect that low interest rates would help the housing market. Sadly, the free markets are rarely reasonable.
A report out this morning shows home prices fell for the eighth month in a row in February. Homeowners across the country have been watching the value of their biggest investment drop for five years now, which is changing how they manage their money and plan for the future.
…
Kai Ryssdal: It’s a reasonable thought to expect that low interest rates would help the housing market. Sadly, the free markets are rarely reasonable.
Surely Kai must be able to imagine where the market would be without the low interest rates. So I’m not seeing what’s unreasonable about the market. Other than manipulation keeping it too high, of course.
You know how you become a financial correspondent/reporter?
Not because you’ve had experience or training in a finance related field.
Unless trying to balance a checkbook is considered “financial”.
No…..Your boss call you into the office one day, waves his magic wand, and POOF! You are no longer the local news or sports reporter, you are the Financial Reporter.
Fact.
The government is trying to maintain residential real estate prices at bubble levels, above what most people can pay.
While this makes Wall Street/REIC quite happy, it doesn’t help the deficit, or make the housing market sustainable or healthy. It’s like helping a cocaine user to avoid withdrawal by giving him more cocaine.
Been the game plan all along.
If they are forced to sell at the “market price”, everyone holding residential real estate/MBS is insolvent.
So the plan was to “stabilize” prices, and hope some miracle came along to boost the economy, so people could pay inflated prices for houses again.
Trouble is, the “giant sucking sound” of jobs disappearing to China/Mexico continues.
Hawker Beechcraft in Wichita is a classic example. Just laid off a couple of thousand people, and closed facilities in Kansas (which BTW, is not exactly a hotbed of overpaid union types).
While at the same time, hiring 1000 people in Mexico, to do the jobs the people they just laid off were doing. And some new ones, like making carbon fiber/composite assemblies.
Just another way the Multinationals play the game. Hire and train a guy/gal in the USA, and if they have a desirable skill set, and you pay them/treat them like crap, they will bolt at the first opportunity. In Mexico or China, you own their azz.
Nobody in Washington or Wall Street cares about this, because paying the serfs more money takes money out of their pocket (despite their “let’s make the pie bigger” BS).
IOW, the slaveowners have become more sophisticated, and have hired a PR department.
You do know that the government is OWNED by Wall St, right?
fraud
noun \ˈfrȯd\
Definition of FRAUD
1a : deceit, trickery; specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right
This sounds to me like fraud, but then I’m not a legal expert.
Banks try to make vacant foreclosures look ‘lived-in’
By Blake Farmer Marketplace, Monday, May 2, 2011
Cottage industry outfits foreclosed homes with temporary residents — to make properties more attractive to potential buyers.
Before and after transformations by home-staging company Showhomes. (showhomes.com)
Tess Vigeland: Hundreds of thousands of homes in this country are somewhere in the foreclosure process. They’ve received notice of foreclosure, or they’re awaiting final seizure and sale by the bank. Once that happens — the house can sit vacant for weeks, months or longer. That, of course, contributes to lower home values throughout a neighborhood, making it even harder to sell that house. Now some enterprising banks are filling foreclosed homes with what you might call ‘human props.’
…
“Now some enterprising banks are filling foreclosed homes with what you might call ‘human props’.”
Why not just keep them filled with FBs. Allow the FBs to think they are clever by squating while in actuality they are doing the banks a favor by staying (up until the moment when the banks decide it is in their interests to foreclose and then throw the FBs into the street).
Better yet: Keep the FBs staying AND paying. Promise the FBs that their mortgage interest rate will be reduced any day now and that they should somehow keep up with the payments until it is.
There is a certain strange irony here in case nobody gets it: The FBs who scream victim because they think the banks screwed them when they bought the house are the same people who believe the banks when the banks tell them they are going to modify the terms of the mortgage.
How do you apply for this job?
As with any other good jobs, you have to know somebody.
Having held several good jobs which I obtained by directly contacting the decision maker with power to hire me, whom I did not know previously, and convincing him* I was qualified, I have to disagree with you.
*In was case, there was a female DM involved with the hiring process…
is that dominatrix or decision maker??
Now Megabank, Inc is a slumlord? Seems fitting…scum bag banksters…
Cities face hurdles in foreclosure cases
By Janet Babin
Marketplace, Thursday, May 5, 2011
Los Angeles is suing Deutsche Bank for neglecting foreclosed homes, joining other cities trying to get banks to pay for neighborhood blight.
Deutsche Bank
The logo of Germany’s leading bank, Deutsche Bank, is seen at the banks headquarters in Frankfurt am Main, central Germany, on September 13, 2010. (DANIEL ROLAND/AFP/Getty Images)
Tess Vigeland: Damage of the man-made kind has descended on cities around the country since the housing bust. In many of them, you’ll find block after blighted block of vacant homes. City halls have tried suing the big banks that made the subprime loans that led to all these foreclosures.
Now, Los Angeles is the latest entrant in the litigation game, with a new approach. Instead of attacking lending practices, it’s suing Deutsche Bank for — essentially — being the biggest slumlord in town. Marketplace’s Janet Babin reports.
…
Remember a few years back when people were reporting no building in their areas and I said Gee,I still see big places going up on multi-acre lots. Wondered if it was Armageddon planning?
Here’s one of them, for sale just 3 years later. It was on the market last year. On 40 acres. Preservation district? It’s built on a former cornfield surrounded by other farm fields.
http://cnyhomes.com/Listing/Search/info.cgi?mlnum=S235846
At least the Madison County taxes are lower. They might have an edge. ; )
That’s a beautiful house on the inside. Although, no serious Armgeddon planner would build a house like that. They’d be lucky to keep the kitchen warm.
Yeah, once I saw the photos I laughed at myself too. All you can see from the road is the top floor and the roof. The house is probably close to 1/4 mile back in an open field.
I’ll have to check the tax records. I’ve been bumping into more and more properties that have been skipping out on their taxes signalling the mortgage may be in the same shape. I found one that hadn’t paid since 2009. I don’t think he built it much before that.
“All you can see is the top floor and roof…….close to 1/4 mile back in an open field”.
Perfect Armageddon House.
-You can monitor the road traffic, without the house being very visible from the road.
-And you have no cover between the road and the house. Pick up a couple of Barrett 82s, some NVGs and everythings good.
Now all you need is access to fresh water. And some corn to throw out in the field for deer bait.
You don’t have to be protected like Fort Knox. Just make sure you are the “hardest target” in your neighborhood.
Sorta like you don’t have to be the fastest/smartest gazelle, but you definitely don’t want to be the slowest/dumbest.
Oh that was interesting. Just pulled up the tax records. Tentative full market value of the home for 2011 is $575k. So where’s that $1.4 mil list price coming from?
I could live large just in the floor space of that garage.
Consumers borrowed more on credit cards in March
WASHINGTON (AP) — Consumers used their credit cards more in March, marking only the second increase in the more than two years since the height of the financial crisis.
The Federal Reserve said Friday that consumers increased their total borrowing by $6 billion in March, the sixth consecutive monthly gain. Consumers borrowed more to finance car loans for the eighth straight month. And a category of borrowing that includes credit card use rose for only the second time since August 2008.
More frequent credit card purchases could be a sign that consumers are feeling more confident about the economy.
The 3 percent overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion, still just 1.3 percent higher level than a nearly four-year low of $2.39 trillion hit in September.
Americans spent more in March on furniture and electronic products, according to the government’s latest report on retail sales. But they also had to pay higher prices for gas. Part of the rise in credit card borrowing may reflect the spike in pump prices.
Households began borrowing less and saving more during the recession, which began in December 2007. Economists think the belt-tightening may finally be coming to an end, thanks to gains in hiring and a one-year cut in Social Security payroll taxes. More borrowing and spending would mean stronger economic growth. Consumer spending accounts for 70 percent of economic activity.
“More frequent credit card purchases could be a sign that consumers are feeling more confident about the economy.”
Or that they lack cash to pay for essentials.
Credit card usage uptick is probably due to increased auto fuel prices. Total cost to fill those big gas tanks is now so high it requires use of a card because nobody carries around that much cash!
In related “green shoots” news, my boots on the ground observation of expanding credit conditions include two storefront loansharking operations right across the street from each other(they call themselves “finance companies”) that offer small cash loans. Their advertised maximum loan amounts just doubled (from $1500 to $3000). Oh happy day! The “Recovery” must have arrived! The photos used in their print advertising are hilariously manipulative. One shows a very upset looking hispanic dude regarding a giant pile of bills on a table. The other shows an anglo woman with a sack of groceries. The expression on her face is probably supposed to convey worry but it looks more like she just realized that she wet her pants…again.
Does not help that wage increases are so restrained. They were up all of 3 cents an hour last month. So people have an extra 24 cents a day to buy gas: http://www.usatoday.com/money/economy/2011-05-06-jobs-april-unemployment-rate_n.htm
“And in this corner, ……wearing the white, brown and yellow jockey shorts……..”
Inflation.
Must be nice to be paid by the word.
I see you’ve been busy Professor. There is an awful lot of news to watch all of a sudden. Does anyone feel a sense of deja vu? I can’t shake the feeling of Spring 2008.
“I can’t shake the feeling of Spring 2008.”
Yup
In the education world, my district in particular, the expiration of ARRA funds is making it just like 2008. ARRA funding bought the ed. world 2 years of ostrich bliss. My MIL is in town and told me about the Jordan layoffs:
“Karen Smith, is a teacher in the business department and has worked at Jordan-Elbridge for 18 years. She said she received a generic layoff form letter that didn’t have her name on it and included a brief exit interview to be mailed in.”
http://auburnpub.com/news/local/article_857e1f7a-6584-11e0-b102-001cc4c002e0.html
I think my wife and I will be o.k., but we’ve passed the stress point; we are no longer worried — whatever happens, so be it. We’ll make it one way or another.
Poor Jordan Elbridge has been through the wringer w/a school board trying to rid of personnel for unsubstantiated personal reasons and wracking up the lawyer fees big time as nobody on that board will step down despite a really angry and active public. I’ve never seen anything like it. It’s gonna take a long time for that town to heal. In the meantime the kids and taxpayers pay the price for personal vendettas in small towns.
In that particular instance budget cuts only exacerbate an already sad situation.
As I’ve said many times, the fault with education like squarely with local school boards and the parent who voted them in, not the governments.
Yes, many states have screwball state laws, but most of the real power is at the local board level.
“We’ll make it one way or another.”
Congratulations! Step 1 to surviving the housing bubble collapse is to start worrying and resolve to roll with the punches as best possible.
startstop worryingDang Freudian slip is showing again!
“I see you’ve been busy Professor.”
Chalk it up to the occasional case of insomnia, coupled with an unlimited number of readily-available stories on the never-improving real estate situation…
“Consumers borrowed more on credit cards in March.”
Yeah — I wonder how much of that was grocery bills?
Or other essentials.
I don’t see any of this so called “confidence”. Of my coworkers, only the young singles are taking a real vacation where you go somewhere other than grandma’s house. The formerly ubiquitous new car temp tags are AWOL both at work (actually, 1 guy just bought a ten year old Passat) and in the neighborhood.
No, no- they’re feeling ‘more confident about the economy’.
Gas and food inflation is glaringly obvious here in CA. Gas is $4.30 everywhere in the city. $50 to fill up my tank.
Food has gone through the roof. I’m a tightwad so I pay pretty close attention to prices.
Time to pump up the tires on the bicycles and fire up the crockpot.
“Consumers borrowed more on credit cards in March.”
Yeah — I wonder how much of that was grocery bills?
“Gas and food inflation is glaringly obvious here in CA. Gas is $4.30 everywhere in the city. $50 to fill up my tank.”
It’s no picnic in the South Bay either sfrenter. Soon we’ll be looking at $5.00+ fuel. Good thing I have a motorcycle that gets 50 mpg.
I am just starting to look for a smaller diesel car for my wife. Something that gets 50 or so mpg.
Does anybody have any recommendations?
If you want an affordable Diesel car, I think your only choice is a VW.
Me and my husband loved his Jetta TDI.
And their diesels are selling for a premium. And reliability is questionable, at best. I was a VW fan from back in the Rabbit days, but their reliability has tanked (no pun intended). And isn’t diesel even more expensive than regular gas? I’d get a regular-gas Honda Civic or the like.
How about a Segway (if wifey works within two miles of your residence). When I lived in the South Bay I saw someone on a Segway on Torrance Blvd near Hawthorne Blvd.
But then, if you don’t commute far, may as well have a muscle car (Mustang 5.0 litre is my dream).
I otherwise recommend a Prious. It was the popular car of choice for those colleagues who drove 60 miles each way to the South Bay office where I worked.
Take a look at the 2010 4.6’s. The Ford Homers consider them yesterdays news, now that the 5.0 is out. And their prices have suffered accordingly.
OTOH, if you have to drive any distances at all, you can order all of the GT suspension bits on that new 300hp V6.
Decisions, decisions………
My youngest thinks she needs a Mustang GT, with a 5-speed. (all of my daughters can drive sticks).
Yeah, that’s got good news written all over it……..an 18 year old with a 5 speed Mustang GT. Better get that Dana 60 on order.
At least the ex is paying her insurance. Wait a minute…….
“Sure let’s get you a NEW one. Maybe a Boss 302 even…..oh what the hell, how about a Corvette?…….”
I figured as much that the “lesser” Mustang prices would drop.
If I am certain that I will be working in Tampa for a year, I will buy a late model Mustang. But I am still as uncertain as in December 2010.
I must be getting cheap and cranky in my old age, but I’m past the need to pay an extra $10K, just for the privlege of having two “5.0″ nameplates on my front fenders.
4.6 Mustang GT + Paxton supercharger = new rear tires every 6 months.
4.6 Mustang sounds good enough for me too. I guess I could do without the 5.0.
“How about a Segway (if wifey works within two miles of your residence).”
I don’t get the Segway. Why not walk? Even with my bad joints, I can walk 2 miles. And it is better exercise.
How do Segways do on hills? I live at the top of one that can be scarey on a bike. Would a Segway be better?
I think I’d rather spring for an electric assisted bike.
The veggie oil people are starting to look smug, too. For diesel, I’d stick with a VW, then convert it so you can use veggie oil or diesel.
Here they have veggie oil co-ops, and there are quite a few places you can buy it. Couple of years ago it seemed expensive, but now, not so much.
I am just starting to look for a smaller diesel car for my wife. Something that gets 50 or so mpg.
Does anybody have any recommendations?
“Yeah — I wonder how much of that was grocery bills?”
The part that wasn’t gasoline bills.
sleepless_near_seattle,
Thanks for that info. on 60 Gates 94110. Where/how’d you get it?
The brothers defaulted on the house (per the neighbors). If it’s for sale (it does have a “for sale” sign on it) then why doesn’t it show up as for sale on any websites?
I am so sure that it’s way too early to even think of buying in San Francisco, but this is a detached SFH in exactly the spot I want to live. With open space - city land that won’t be developed - right next to it and neighbors that are good friends. And lots of parking.
Not sure if this helps at all, but the house you posted about yesterday is currently owned by what looks like two brothers. Looks like they bought it out of their father’s (or other family member’s) trust for $601k.
The loan history suggests that they had a $480k mortgage as of the sale date, and took out a $100k second in March, 2006.
Still listed in their names, so either they’re leaving it vacant or they may have walked and the lender has not started FC procedure. I’d check with the county. They’d know if their is a tax delinquency on the property, which might give clues about current status.
“…then why doesn’t it show up as for sale on any websites?”
I can answer this one:
Because most realtors don’t know squat about the Internet. If there isn’t a hand-holding, automatic wizard to help them, they’re lost.
I often wonder how much of the shadow inventory needs to be burned off before the new home market will see a revival. The answer is not 100%, as the media seems to promote.
In a normal market, new homes sell because people don’t want to deal with a fix-up, or older home. So, higher priced new homes can coincide with lower priced older homes on the market at the same time. That’s the way it has been for decades.
The reason the new home market got so crushed during this downturn is that many recently built homes (<10 years old) were foreclosed upon and hit the new home market head on.
However, plenty of the foreclosures are older homes. Not all as bad as what Ben describes above with the mold, but definitely not new (or even well-maintained older product).
I think of the shadow inventory as a giant pool of homes. For the last several years, the stream of new foreclosures has continued to keep a decent mix of quality in the shadow inventory. However, now there are fewer and fewer new foreclosures (we are back to 2008 levels, or earlier of early stage delinquencies), more and more this pool of shadow inventory is becoming stagnant. What I mean by this is that not as many newer or nicer homes are entering the pool (by virtue of lower volume of delinquencies), but the same number of newer or nicer homes are leaving the pool.
Of what is there now, the first homes to sell from the pool will be the easiest to sell (newer, well maintained, good school districts, etc.). These are the homes that most directly compete with the new home market. Over time, the quality of what is left in the pool of shadow inventory will become poorer and poorer in terms of age, quality, school district, damage, etc.
My question, which is impossible to answer is:
How much of the shadow inventory needs to be burned off before there can be a robust new home market again (and be a driver for jobs, etc.)? This is where the difference between what is available in a market, and a new home is great enough to warrant the price difference between the two. This will be different for each market, but certainly before the last of the shadow inventory clears the market. Ben’s mold infested Flagstaff home noted above would never compete with a new home. If all that is left of shadow inventory in a particular market is homes of that quality or only slightly better, prices for good quality homes will recover and new homes will be built.
In some California markets there are already rumblings of there being no quality homes to buy, despite the perceived level of distress in the market (I’ve heard this in Silicon Valley as well as Los Angeles).
With the assumption that half of the foreclosures were newer and well maintained homes (less than 10 years old), then I think it is safe to assume that only about half the shadow inventory needs to be burned through before a new home market can come back. I personally believe this to be high. Many of the most distressed owners lost their homes early (paid the highest price, had the least amount of equity, etc.), and those homes have already moved through the system. It wouldn’t surprise me if only a third, or less of homes in the shadow inventory actually would compete with the new home market.
That means that S&P’s estimate of 44 months to get through 100% of the shadow inventory equates to a potential recovery in the new home market starting in about 1.25-1.5 years. Since the market is so mixed, and some markets have a lot less than 44 months of shadow inventory (with others having more), some markets will begin new home construction within 12 months. Others will be several years into the future.
I think things will get interesting within the next 12-18 months…
There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.
– At the current pace of job creation, the economy won’t return to full employment until 2018.
– Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.
– Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.
– 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor’s degree.
– Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%.
– Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010. Government transfers have risen from 11.7% of personal income in 1980 to 18.4% in 2010, a post-war high.
The bottom line is simple says Schwenninger: The middle class is shrinking, which threatens the social composition and stability of the world’s biggest economy. “I worry that we’re becoming a barbell society - a lot of money wealth and power at the top, increasing hollowness at the center, which I think provides the stability and the heart and soul of the society… and then too many people in fear of falling down.”
finance.yahoo.com/blogs/daily-ticker/america-middle-class-crisis-sobering-facts-141947274.html
unemployment is only one part of the problem.
It’s not a “barbell”
Its a bar with a 5 pound weight (the top 5%ers) on one side of the bar, and 500 pounds of plates on the other side.
For kicks, I went to an Open House in Newport Beach, California since I took the family to Corona Del Mar and happened to be in the neighborhood. Surprise, Surprise, the realtor said we have hit the bottom in Newport Beach and she’s seeing a lot of activity. She even shocked me with the statement that “it’s different in Newport Beach”, but with a 2.6 million price tag for a 3000 square foot house with an ocean view, maybe she’s actually right. If rich people are going to live somewhere, it actually will be there. The same house would sell easily for 4.5 million during the bubble she said.